Want More?

MarketWatch reports that last year, the average cost of group daycare rose 2.6%, while the average cost of home-based care, such as nannying, rose 4.8%. That might not sound like much, until you take into account that the average after-tax household income increased only .6%—which means that the cost of at-home child care increased at eight times the rate of what families are bringing home.

This data comes from a new study conducted by Child Care Aware of America, an organization that works to increase access to high-quality, affordable child care in the United States. The study found that on top of higher child care costs, the child and dependent care tax credits that could make quality care more affordable haven’t changed in 10 years. Taking inflation into account, this means that the effectiveness of these tax breaks has actually decreased. In 2002, the average weekly payment for child care was $95 per week; in 2011, it was $143 a week—a jump of more than 50%.

Currently families with middle or high incomes can usually get a credit of 20% (up to $3,000 for one child and $6,000 for two or more) for child care expenses. Low-income families should be able to claim a 35% credit, but the reality is that they often don’t owe enough in taxes to benefit from it. While these tax breaks have the potential to impact many families across the country (particularly single parents, who put more than a quarter of their median income toward child care), they aren’t considered large enough to garner enough Congressional attention for a revamp.

$143…? I wish! Full-time care for one pre-school aged child in the Boston area is more like $200 p/wk at an unlicensed, in-home daycare, $300 p/wk if you luck out with and get a spot in a high-quality, affordable center, or easily $500 p/wk at a well-known daycare.

Andrea

I have two little ones and it is over $500 per week. And it has gone up 2.5% per year all of the last 3 years I have been with this center. Sadly, this is the “market rate” for the area I live in.

Security

Follow Us

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial adviser for advice specific to your financial situation. LearnVest Planning Services and any third-parties listed, discussed, identified or otherwise appearing herein are separate and unaffiliated and are not responsible for each other’s products, services or policies.